Getting my finance in order.

[SIRC4SM]

Here finally got my first pay check 3.7K (After taxes)
1. My monthly expense Rent $420 + utilities $140 + Groceries $200 = $760 (lucky me )
2. There is another $700 that just disappears, I don’t know where but it does. (lol)

So I spend around 1.5 k saving me 2.2 k this month. Hopefully I will be able to save 2 k every month.
Now bad thing, I checked on credit karma my score is 598. Good thing I have no loans what so ever

Now here’s the question.
1. Where to put the money? My banks savings account pays no interest.
2. If I spend so less how will I ever build my credit score?

[Shewillbemine]

Everyone here will tell you to post a more detailed budget particularly because your money is going somewhere and you're not even sure where it goes/went.

1. To answer your first question, assuming you have no debt of any kind, you should establish a 3-6 month emergency fund. This could be kept in a simple savings account or money market account.

2. Establishing credit isn't just about spending more money. It's mostly about time to prove that your financial habits are solid and consistent, along with paying your bills and keeping a low debt ratio.

Btw, since you say this is your first paycheck, I would use the next several months to actually monitor what your spending habits happen to be. It's great that you are thinking of budgeting and saving now, but don't lull yourself to sleep with just the very first payday.

[jpg7n16]

Originally Posted by SIRC4SM

2. There is another $700 that just disappears, I don’t know where but it does. (lol)

My guess would be on things like, oh I don't know, gas, toiletries, clothes, insurance, entertainment. That sort of thing

You have the income and low enough expenses that it's not too big of a deal -- but, having no idea where your money is going is not a good habit to get into.

Now here’s the question.
1. Where to put the money? My banks savings account pays no interest.

See post above about 3-6 month EF. Get that 1st. Interest rates aren't really that big of a concern on this money. Just accessibility.

3 months expenses in cash = $4500. I'd recommend you get between $5000-7500 in cash. You should have that saved up in approx 2-4 months.

Then up retirement savings to 15-20% of income. Using 401k + Roth + brokerage account (for additional savings).

2. If I spend so less how will I ever build my credit score?

Why do you feel your credit score is so important?

I'd recommend that you find a card with a good rewards program that fits your style (cash back, airline miles, hotel points, etc.). Use it only on things you would buy anyways - get the rewards as a bonus. Pay it off in full every month. Multiple times each month actually.

Don't ever borrow/use credit/spend more - just to raise your credit score. Only do things that are in your financial best interest.

[pdweaver]

Your Credit Score is very important so it is good that you are working on improving this. You won't be able to find a credit card that will approve you with your score that low. Find out exactly what is affecting your score, if something is in collections then pay it off. Get a rewards credit card that you PAY OFF MONTHLY to build the score. Spending too little won't affect your score. I wouldn't worry about low interest in a savings account until you have enough for it to make a difference. Thats all I would add from the other posts.

[SIRC4SM]

Originally Posted by Shewillbemine

Everyone here will tell you to post a more detailed budget particularly because your money is going somewhere and you're not even sure where it goes/went.

That 700 goes towards my lunch, my parties, games, outings, insurance n all. I keep track of my money. As i said this is my first pay check. Over the past few months i have learned to spend less and I have no plans to change my habits. i spend no more than $50 on temptations, rest all is basic necessity.

I do have a student credit card which has a decent rewards program and I had almost maxed it out put I paid it in full now and intend to keep it that way.

Emergency fund is a great Idea, I heard something about credit union but I have no idea what it is. Anyone has any Idea????

[jpg7n16]

Originally Posted by SIRC4SM

Emergency fund is a great Idea, I heard something about credit union but I have no idea what it is. Anyone has any Idea????

A credit union is essentially a bank. A bank for a set group of people. They do all the same things as banks do, but they usually have slightly better interest rates. It has nothing to do with your credit score.

MyCreditUnion.gov

Financial Tip #2 - How Credit Unions Are Different Than Banks

[SIRC4SM]

Originally Posted by jpg7n16

A credit union is essentially a bank. A bank for a set group of people. They do all the same things as banks do, but they usually have slightly better interest rates. It has nothing to do with your credit score.

I know credit union is a bank. I know a bank account cannot improve my credit score. I just want to know is having an account with credit union good Idea? What are the benefits? Like good interest rate or easy loans?

[disneysteve]

Originally Posted by SIRC4SM

I checked on credit karma my score is 598.

2. If I spend so less how will I ever build my credit score?

I do have a student credit card which has a decent rewards program and I had almost maxed it out put I paid it in full now and intend to keep it that way.

Part of the reason your credit score is low is probably from maxing out your credit card. In the future, keep your charges under 30% of the credit limit and pay the bill in full every month. That will help raise your credit score over time. Use the card just to make purchases that you'd be making anyway - gas, groceries, clothing, utility bills, insurance premiums, etc. Never use the card to buy something you aren't going to buy anyway and never, ever carry a balance again.

[jpg7n16]

Originally Posted by SIRC4SM

I know credit union is a bank. I know a bank account cannot improve my credit score.

Sorry, you said you had no idea what a Credit Union was. Just tryin to help.

I just want to know is having an account with credit union good Idea? What are the benefits? Like good interest rate or easy loans?

Please refer to the links I posted. They answer all those questions.

Though for your situation, I wouldn't be concerned about how easy it is to get a loan. What would you need a loan for? You rent, so no need for mortgage refinance. You have no outstanding loans, so no need to refi. No credit cards, so no need to consolidate. And you have a surplus of $2k+ each month, so can easily save up for a new car. I don't see any need for a loan anytime soon, do you?

[SIRC4SM]

Originally Posted by jpg7n16

I don't see any need for a loan anytime soon, do you?

No really I appreciate your help. Those links were helpful.
I need a loan to buy a car. Not today but I want to buy a car by March. I will have 6k in savings by then.

[disneysteve]

Originally Posted by SIRC4SM

I need a loan to buy a car.

No you don't. If you have $6,000 saved then you buy a $6,000 car.